Malawi - Third Highway Project

Report No. 1607a-MAI Appraisal of a Third Highway Project Malawi FILE COPY December 7, 1977 Regional Projects Department Eastern Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Malawi Kwacha (MK) US$1.00 = MK 0.89 MK 1.00 = US$1.12 WEIGHTS AND MEASURES 1 foot (ft) = 0.305 meters (m) 1 mile (mi) = 1.609 kilometers (km) 2 1 square mile (sq mi) = 2.590 square kilometers (km ) 1 ton (t) - 0.907 metric tons (m ton) GLOSSARY OF ABBREVIATIONS AfDB - African Development Bank DRIMP - District Roads Improvement and Maintenance Program EPD - Economic Planning Division of the Office of the President and Cabinet GDP - Gross Domestic Product GNP - Gross National Product MTC - Ministry of Transport and Communications MWS - Ministry of Works and Supplies vpd - vehicles per day GOVERNMENT OF MALAWI FISCAL YEAR April 1 - March 31  FOR OFFICIAL USE ONLY MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ........ . . . ........................... i 1. INTRODUCTION ............... ...................... 1 2. THE TRANSPORT SECTOR ............................... 1 A. Economic Setting ................. . . ................ . 1 B. The Transport System ........................ .. 2 C. Transport Policy and Coordination ............. . 4 D. Previous Bank Group Involvement ................ 5 3. HIGHWAYS ..................................................... 7 A* The Network ...................... o o.............. 7 Bo Road Use o o. ........................................ 7 C. Administration . .... ...*..0. .0. .. . . . .. ...... . . . . . 8 D. Planning and Financing o ooooo...................... 9 E. Engineering .................................. .o oooo o..** .... 10 F. Construction ............................ .................. ..O 10 G. Maintenance .................................................. 11 4. THE PROJECT ........ ............................... 12 A. Objective ..................... ........... 12 B. Description ............. . .................. .... 12 C. Cost Estimates ................................ 13 D. Financing ....... ............................... 15 E. Implementation and Procurement .................. 15 F. Disbursements ..... o............ ..... ...... . ... 16 This report was prepared by Sigfus 0. Sigfusson (Engineer), and Philip W. Blackshaw (Economist) and edited by Marie Garcia-Zamor. This document has a rstricted distribution and may be usd by recipients only in the performance of their official duties. Its contents may not otherwise be disclosd without World Bank authorization.  TABLE OF CONTENTS (Continued) Page No. 5. ECONOMIC ANALYSIS ................................. 16 6. AGREEtiENTS REACHED AND RECOMMENDATION ............. 18 TABLES 1. Highway Network Classification, 1972-76 2. Vehicle Fleet, 1967-76 3. Current and Planned Road Projects 4. Annual Highway Expenditures, 1970-77 5. Road Design Standards Adopted by the MWS 6. Design Standards for the Kasungu-Jenda Road 7. Estimated Schedule of Disbursements 8. Cost of Equipment and Facilities for District Roads Pilot Scheme (in Kasungu District) 9. Vehicle Operating Costs 10. Road Construction Costs and Benefits ANNEXES I - Transport Related IDA Projects in Malawi II - Project Progress Reporting Requirements CHARTS 1. Organization of the Ministry of Works and Supplies 2. Project Implementation Schedule M1AP Malawi - Third Highway Project, Transportation Network (IBRD 12857)  MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. A major socio-economic objective of the Malawi Government is to reduce regional imbalances by promoting development in the northern half of the country. The proposed project will support this objective by improving part of the main road which links the northern part of the country with the capital, Lilongwe, and with the more developed southern areas. ii. The project is directly related to work carried out under the First and Second Highway Projects. The major component of the proposed project is construction to bituminous standards of a 53-mi road between Kasungu and Jenda to link with the road being constructed under the Second Highway Proj- ect between Kasungu and Lilongwe. The project also provides: (i) for some strengthening of two short lengths (totalling about 8 mi) of the Zomba- Lilongwe road, constructed under the First Highway Project, and an adjoin- ing section of about 4 mi, all of which have been affected by heavier than expected traffic; and (ii) a feasibility study and, if justified, detailed engineering of the Jenda-Mzuzu section of the north-south road, the only section remaining to be improved after works currently in progress, or for which financing is assured, are completed. iii. Total project cost is estimated at US$14.3 million excluding taxes and duties of US$0.8 million, with a foreign exchange component of US$9.3 million or 65%. The project will be financed by an IDA Credit of US$10.5 million, which will cover 74% of total project cost net of taxes and duties, a credit of US$1.8 million from the OPEC Special Fund, and a Govern- ment contribution of US$2.0 million net of taxes and duties, representing 14% of the net project cost. iv. The Ministry of Works and Supplies will be responsible for project implementation. The road construction and strengthening contracts will be awarded after international competitive bidding in accordance with Bank Group Guidelines for Procurement. Consultants will be employed under terms and conditions satisfactory to IDA. Road construction is expected to commence in early 1978 and be completed by late 1979; the strengthening works will be carried out during 1978. V. The proposed road works are economically sound, with an estimated economic return of 14% for the Kasungu-Jenda road and 13% for strengthening parts of the Zomba-Lilongwe road. vi. The project is suitable for an IDA Credit of US$10.5 million to the Government of Malawi on standard terms.   MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Government of Malawi has requested IDA assistance in financing a highway project to further its transport development strategy of providing all-weather access to the less developed central and northern regions, and promoting the improvement and maintenance of lower class roads to facilitate the transport of agricultural produce and access to public services in rural areas. 1.02 The proposed project has evolved from a feasibility study (1972-73) and detailed engineering (1973-74) financed by the United Nations Development Programme, with the Bank as executing agency, and from previous IDA-financed highway projects. Under the Second Highway Project, IDA is assisting in the construction of the Lilongwe-Kasungu section of the north-south road. The proposed project includes construction of the next section north from Kasungu to Jenda (53 mi) and a feasibility study, followed, if justified, by detailed engineering of the adjoining Jenda-Mzuzu section (about 110 mi), the only section of the north-south road not covered by detailed engineering. The proposed project also provides for strengthening two short lengths (t,-tal 8 mi) of the Zomba-Lilongwe section of the north-south road, financed unL-r the First Highway Project and an adjoining section of about 4 mi; this streng.hen- ing is necessary because of subgrade failure which has been exacerbated by much heavier traffic than expected at appraisal (para. 4.05). 1.03 The project was originally intended to include extension of the District Roads Improvement and Maintenance Program (DRIMP) initiated under the Second Highway Project. However, it will now be possible to finance this extension from savings under that Second Project. 1.04 This report is based on the above-mentioned studies and on the findings of an appraisal mission which visited Malawi in February-March 1977, comprising Messrs. S.O. Sigfusson (Engineer) and P.W. Blackshaw (Economist). 2. THE TRANSPORT SECTOR A. Economic Setting 2.01 Malawi is a long, narrow, landlocked country situated in the Great African Rift Valley. It has a land area of about 36,000 sq mi and a lake area of 9,400 sq mi. Altitudes range from about 200 ft above sea level in the Shire Valley in the south to over 8,000 ft in the northern plateau. A major escarpment runs the length of the country, separating the Lake Malawi plain (average altitude 1,500 ft) from the plateau to the west (average  altitude 4,500 ft). Most of the main rivers flow from west to northeast across the country's transport axis into Lake Malawi. This topography makes provision of transport facilities expensive in many parts of the coun- try. 2.02 With a population of about five million, Malawi is relatively densely populated by East African standards. Development in the country's three administrative regions has been rather unbalanced. Until indepen- dence in 1964, most development was concentrated in the Southern Region, which had the only rail link, most of the all-weather roads, the administrative capital of Zomba and the main commercial center of Blantyre. The much lower level of development in the Central Region and, in particular, the Northern Region, encourage a southward migration of population. Population density in the Southern Region is still more than three times that of the Northern Region, and almost three quarters of the total population lives in the southern half of the country. One of the Government's main socio-economic objectives, as set out in the Statement of Development Policies (1971) is to promote more balanced regional development. To this end, it has moved the administrative capital some 150 mi north from Zomba to Lilongwe, and has initiated several agricultural development projects in the northern half of the country, including major projects at Karonga and Viphya, and smaller projects around Kasungu and Mzimba. Further development in these areas is planned under the National Rural Development Program. 2.03 Since almost 90% of the population lives in rural areas, and agri- culture contributes about 90% of Malawi's exports, rural development is a primary social and economic objective. In addition to raising agricultural productivity, it is seen as an effective vehicle for the Government's policy of redistributing incomes in favor of the rural poor. Although the most rapid increases in agricultural output in the past have been achieved by private estates and discrete regional projects, Government is now directing its agricultural program towards a minimum package approach to rural develop- ment with a wider geographic coverage as epitomized in its National Rural Development Program. Preliminary investments in that Program are being supported by a Third Window Bank Loan No. 1286-T-thI, 2.04 Gross domestic product increased, in real terms, at the relatively rapid rate of 6.5% per year over the period 1965-76. Even so, per capita GNP was US$150 in 1975, and Malawi is classified by the United Nations as one of the least developed countries in the world. B. The Transport System 2.05 The principal features of Malawi's transport system are a main road network which is fairly well developed south of Lilongwe but very un- developed in the northern half of the country; a largely underdeveloped lower class road network; a rail system in the southern half of the country which is primarily used for export-import and transit traffic; lake transport which mainly serves the north and compensates to some extent for the undeveloped  - 3 - land transport links; and air transport which is dominated by international passenger traffic. Road transport dominates internal transport while most export-import freight is carried by rail. Highways 2.06 Some 977 mi (14%) of the approximately 6,820 mi of roads are paved, and 369 mi (5%) are of engineered gravel standard; the rest, earth roads and tracks. Road density is 184 mi per 1000 sq mi or 1.4 mi per 1000 inhabitants, which is about average for East African countries. However, the very low quality of most of the network results in high transport costs. Details concerning highways and their administration are given in Chapter 3. Railways 2.07 The main railway line extends from Salima in the Central Region, through Blantyre, to the extreme southern border (277 mi) where it connects with the line to the Mozambique port of Beira. A recently built branch line (63 mi), offering an alternative route to the sea, extends eastward from Nkaya to Nayuci, and connects with the Mozambique line to the port of Nacala on the Indian Ocean. Rehabilitation of the older main line has been underway during the last few years with British and Canadian aid and is expected to be completed within the next six years. An extension westward from Salima to Lilongwe (63 mi), financed by a grant from the Canadian Government, is nearing completion and operations will commence early next year. The Canadian Govern- ment has agreed to provide a grant for a further extension westward from Lilongwe through Mchinji to the Zambian border (68 mi) with the ultimate aim of linking with the Tanzania-Zambia Railway 1/. 2.08 In 1975, the railway carried about 1.4 million tons of freight and about 1.2 million passengers. Despite some loss of traffic due to increasing road competition, rail traffic in terms of ton-miles has grown at an average rate of 7.5% annually since 1970, largely because of increased export-import traffic. In 1975, it carried about 168 million ton-miles of freight, about three quarters of which was import-export traffic or Zambian transit traffic, which is trucked to and from rail heads in Malawi. The rail- way appears to be run efficiently and earns a modest net operating surplus, Lake Transport 2.09 Freight and passenger transport on Lake Malawi is provided by Lake Services Limited, a subsidiary of Malawi Railways, and principally serves the remote northern areas of the country. Traffic volumes are relatively light, amounting to only about 35,000 tons of freight and some 148,000 passengers in 1975. At present about 70% of the traffic is northbound, originating at Chipoka which is served by the railway, but this pattern may change some- what as the impact of ongoing rural development projects in the north is 1/ This would require construction of an approximately 200 mi link in Zambia.  - 4 - felt, notably the Karonga Rural Development Project; under this project, which has been assisted by IDA and the Bank (Credit 282-MAI and Loan 1286-T-MAI), a self-propelled barge has been procured and the Chipoka harbor is being im- proved. In addition, lake transport will increase sharply if a proposed pulp mill at Chinteche in the Northern Region is developed in connection with the Viphya timber exploitation scheme; a study of the infrastructure needs of this scheme is being financed by IDA Credit S-17-MAI. The Lake Service's operating losses averaged US$62,000 per year over 1970-74, a considerable improvement on the average loss of US$180,000 per year over the preceding five-year period. However, cost pressures led to losses of about US$100,000 in 1975 and US$200,000 in 1976. Freight tariff increases averaging 18% were introduced in May 1977 and are estimated to be sufficient for the service to cover operating costs in 1978. Air Transport 2.10 Air transport within Malawi is relatively unimportant compared with the other modes, with only four airports (Chileka near Blantyre, Lilongwe, Mzuzu and Karonga) served by scheduled services. Only the Chileka airport can accommodate long range jet aircraft; it serves as the country's international airport and is also the most important domestically because of its proximity to commercial centers. Chileka accounted for over 80% of Malawi's recorded passenger movements of 327,000 in 1975; 90% of passenger movements at Chileka are international. Recently, the Government decided to develop a second international airport at Lilongwe; its first construction phase has been tendered and will be financed with assistance from the African Development Bank. Total cost is presently estimated at US$50 million. 2.11 Air Malawi, a Government-owned airline, provides international services and all scheduled domestic services. Six foreign airlines also provide international services, and two local companies as well as Air Malawi provide unscheduled domestic services. C. Transport Policy and Coordination 2.12 Malawi's present transport policy has three broad aims: (i) to improve the administrative, social and economic integration of the country by linking all three regions with reliable all-weather connections; (ii) to support rural development by improving access to rural areas; and (iii) to provide efficient links with transport routes to the Indian Ocean seaports for exports and imports. To these ends the Government is undertaking an extensive transport development program; numerous transport studies have been carried out or are in progress and, as stated above, investments are planned and underway in all transport modes. Overall sector priorities are laid out in the Government's "Statement of Development Policies 1971-1980", and deter- mined in more detail in a three-year rolling public sector investment program which is revised annually during budget preparation. The transport sector accounts for 46% of total planned capital expenditures of US$385 million over  the next three years, substantially higher than the 25% share which prevailed during the five years to 1974/75. The increase is almost entirely due to plar.ned expenditures of over US$50 million between 1977/78 and 1979/80 on extension of the railway from Lilongwe to the Zambian border, and construction of an international airport at Lilongwe. When these investments are com- pleted, transport's share of Government's capital expenditure is expected to revert to about its previous level. While the Association has reservations about such investments (paras. 2.13, 2.15), the road program is generally satisfactory (para. 3.10). 2.13 Institutional arrangements for coordination of transport investment planning are adequate. This function is the responsibility of the Economic Planning Division (EPD) of the Office of the President and Cabinet which reviews proposals put forward by the Ministry of Works and Supplies (MWS) for roads and the Ministry of Transport and Communications (MTC) for all other modes. In practice, however, such coordination has been lacking because of limited staff within the EPD, and the development of each mode has proceeded almost independently of the others. Modal development has tended to be complementary rather than competitive, but recent experience with rail invest- ments (para. 2.15) and possible future competition between road and lake transport suggest that a closer analysis of intermodal trade-offs is now required. A recently completed National Transport Study, carried out by UK-financed experts, provides a useful starting point for such analysis, and the EPD is gradually improving its capacity in this respect. In additi,n, the appointment of a local economist to MWS (para. 3.09) will relieve EPD stJf of some project preparation work and enable them to concentrate more on inter- modal issues. 2.14 The Government exercises considerable control over the transport sector through ownership of major carriers; i.e. Air Malawi and Malawi Railways, including the latter's two subsidiaries: Lake Services Limited, which handles nearly all transport on Lake Malawi, and Road Motor Services Limited, a large trucking company. The Government-owned entities are under the jurisdiction of the MTC, which is also responsible for regulating private carriers, mainly those in road transport (para. 3.04). D. Previous Bank Group Involvement 2.15 The Bank Group has been involved in the transport sector of Malawi since 1966 when Credit S-2-MAI was made to help finance detailed engineering of the Zomba-Lilongwe road (180 mi). This was followed by the First Highway Project (Credit 112-MAI, 1968, of US$11.5 million) comprising the recon- struction and bituminous paving of that road, the refinancing of Credit S-2-MAI, and a consultants' study of road transport licensing regulations and road-rail coordination. A Project Performance Audit 1/ concluded that 1/ Report No. 946, December 15, 1975.  -6- all of the project's objectives were achieved. Construction cost was within appraisal estimates, although the road was completed about one year behind schedule. Traffic is about 50% greater than expected at appraisal, and the rate of return is conservatively estimated at 13%, compared with the appraisal estimate of 12%. The consultants' study recommended deregulating road trans- port, raising axle load limits to 9 tons, improving transport statistics, and relating rail tariffs more closely to economic factors, all of which have been implemented, although there is scope for further refinement of rail tariffs. The study expressed misgivings about planned rail investments, but Government did not share IDA's reservations and proceeded with these investments. The Audit concluded that "there are grounds to believe that the country will have an oversupply of transport services" in the Blantyre-Lilongwe-Zambian border corridor. Apart from this, the major recommendations of the Audit called for closer supervision 1/ and rectifying the neglect of lower class roads - although the Audit did not question the composition of the First Highway Project, noting that the "Zomba-Lilongwe road ... is undoubtedly the most important highway in Malawi." Both of these points are being addressed in the Second and Third Highway Projects. 2.16 The Second Highway Project (Credit 523-MAI, 1974, US$10.0 mil- lion) originally comprised construction of the Lilongwe-Kasungu road (70.3 mi) and a pilot scheme for the improvement and maintenance of district roads in Kasungu District serving rural development. Both components are proceeding satisfactorily; the construction is to be completed by the end of this year, a few months behind schedule. The pilot scheme became operational in Sep- tember 1976 and has been successful (paras. 3.16-3.17). Substantial cost savings will be made on the construction component, and it is intended to use these savings to finance an extension of the pilot scheme to seven other districts. Details of this extension will be decided in consultation with IDA following completion of a consultants' study (para. 3.17). 2.17 Finally, transport components have been included in IDA projects in other sectors (Annex I). Credit S-17-MAI, 1974, provides US$2.0 million for planning and engineering of infrastructure for the proposed Viphya timber exploitation scheme. In addition, agricultural projects in the Lower Shire Valley (Credits 114 and 363-MAI) the Lilongwe (Credits 113, 244 and 550-MAI) and the Karonga (Credit 282 and Loan 1286-T-MAI) areas have included con- struction of about 1,680 mi of feeder and crop extraction roads, while the Karonga Rural Development Project also includes port improvements at Chilumba and Chipoka on Lake Malawi as well as procurement of a self-propelled barge for the lake service. 1/ The first contractor selected for the Zomba-Liwonde section was unsatis- factory and had to be replaced, leading to the delay in project comple- tion. The Audit notes that the first IDA supervision mission was some 18 months after commencement of works, and that an earlier mission could have led to speedier resolution of the problem.  - 7 - 3. HIGHWAYS A. The Network 3.01 The 6,820 mi classified road network (Table 1) comprises 1,880 mi of main roads connecting principal cities and towns and 1,520 mi of secondary roads linking smaller centers to main roads, both of which are administered by the Roads Department of MWS. The network also includes 3,143 mi of district roads serving as farm to market or feeder routes, which are the responsibility of the District Councils, and 290 mi of roads with various other designations serving particular towns or estates, administered by MWS. In addition, there are about 1,680 mi of as yet unclassified feeder and crop extraction roads within several agricultural development projects (i.e. the Lower Shire Valley, Salima, Lilongwe and Karonga projects) presently adminis- tered by the project entities but scheduled to be gradually taken over by the MWS by 1979, as well as several thousand miles of unclassified earth tracks for which no organization bears responsibility. It is expected that the more important of these would be absorbed as district roads over a period of time. B. Road Use 3.02 The composition and growth of the vehicle fleet is shown in Table 2. In 1976, the fleet totalled just under 29,600 or six vehicles per 1,000 inhabitants, which is above average for Eastern Africa but only half of Kenya's vehicle ownership rate. The fleet includes about 10,200 passenger cars, 300 buses and 10,800 goods vehicles, with the balance made up of 3,600 motorcycles and 4,700 other vehicles (mostly trailers). Reflecting the general pattern of economic development to date (para. 2.02), 75% of vehicles are registered in the southern region. Over the period 1967-76, the total fleet grew at about 6% per year, with goods vehicles growing much faster than cars, especially over the past five years. More than two-thirds of the goods vehicles have less than a three-ton carrying capacity, and only 3% have more than a 10-ton capacity, but the number of trailers in Malawi has almost doubled in the last two years, and truck-trailer combinations are common on the main routes. 3.03 Until 1974, there were no systematic traffic counts in Malawi. However, following an agreement reached during negotiations for the Second Highway Project, Government has instituted a system of periodic counts and continuous automatic counts, based on a system designed for Malawi in 1973 by the Transport and Road Research Laboratory in England. The counts are conducted by the Transport Unit of the National Statistical Office in Zomba, and a national traffic census has been published annually since 1974. While these counts are not by themselves a sufficient basis for assessing long-term traffic growth, in combination with counts made by consultants over short periods on roads under study and data on fuel imports over the past decade, they suggest traffic growth of 7-9% annually.  - 8 - 3.04 Road transport is now dominated by small operators and is substan- tially unregulated. MTC does prescribe freight rates and passenger fares, but there is considerable undercutting of freight rates, especially since the decline in transport of Zambian import/export traffic following the opening of the Tanzania-Zambia railway. Vehicle dimensions and weight regulations are adequate (maximum allowable axle load being nine tons) but enforcement, which is the responsibility of the Road Traffic Commissioner's Office within MTC and the national police, has, until recently, been generally lax with some signs of road failures that may have been caused by overweight vehicles. Following these failures, IDA missions emphasized the importance of adequate enforce- ment, as required under the Credit Agreement for the Second Highway Project. Government has recently installed three weighbridges at strategic points and enforcement has improved considerably. 3.05 Road users contribute to Government revenue through taxes and duties on fuel, lubricants, vehicles and spare parts and through license and regis- tration fees. The duty on diesel fuel is US$0.10 per gallon and on petrol is US$0.23 per gallon. Duties on vehicles range from 10% for buses and trucks up to 40% for high value cars. There is an 18% surtax on fuel and all vehicles except buses and trucks over 3 tons. Total revenue from road users in 1975/76 is estimated at about US$8 million. Present expenditures on administering and maintaining the road network, including the costs of the Road Traffic Commis- sioner's Office, amount to less than US$3 million. Thus, even after allowing for required increases in maintenance expenditures on District and other lower class roads (paras. 3.08 and 3.11), road user taxation can be viewed as making a significant contribution to the capital costs of the network, although revenue from such taxation is not tied to road construction. C. Administration 3.06 As noted in para. 3.01, MWS is responsible for all classified roads except district roads, which are the responsibility of the District Councils. MWS has divisional offices in each of the three regions, which are directly responsible for field operations for roads and other works. Road planning and overall supervision are handled by the headquarters staff, located at Lilongwe. The Ministry has a Plant and Vehicle Hire Organization with workshops in all regions and a central workshop in Blantyre for major repairs; equipment avail- ability is satisfactory. The Ministry's Design Department has responsibility for the engineering of roads and bridges (para. 3.12) as well as the design of structures and of water supply systems. 3.07 The Roads Department has 13 engineering posts, 5 of which are filled by senior expatriates, 5 by Malawians and 3 presently vacant posts which are expected to be filled by Malawians graduating from the Malawi Polytechnic during 1977. The Government has an active program for selecting, educating and training nationals for professional positions, but the program presently yields too few qualified personnel, mainly because of scarcity of qualified  - 9 - candidates. Training for such positions is being provided under bilateral aid, mainly British and Canadian, and UNDP grants; such training opportunities are more than adequate for the supply of suitably qualified trainees. More- over, the Malawi Polytechnic is developing its capacity in this area, and the need to send engineers abroad for training wil. gradually diminish except for post-graduate training. Good progress has been made in training lower echelon personnel such as road supervisors, foremen, equipment operators and mechanics. This training is conducted in the Ministry's fully localized Training Branch in Zomba. Availability of such personnel is adequate and the capacity of the Training Branch is satisfactory to keep pace with demand. 3.08 District roads have largely been neglected because of the inade- quate resources of the District Councils, but under IDA's Second Highway Project a District Roads Improvement and Maintenance Program (DRIMP) has been initiated in one District (paras. 2.16 and 3.16), and will be extended to seven more Districts. D. Planning and Financing 3.09 Each year the MWS submits proposals for highway improvements to the Office of the President and Cabinet, whose Development Division is responsible for preparing a rolling three-year development program after analysis by the Office's Economic Planning Division, whose capacity in thiL regard has recently been strengthened (para. 2.13). All major projects are preceded by feasibility studies, for which MWS relies on consultants. The recent recruitment of a local economist for MWS will provide useful project preparation capacity, but reliance on consultants for most feasibil- ity studies is expected to continue. 3.10 A summary of current and planned road projects is presented in Table 3. Reflecting government's general strategy of promoting development in the Central and Northern Regions, about two-thirds of current and planned road construction is in those regions. The road south from Karonga through Chiweta to Rumphi is currently under construction, and construction of the next section south to Mzuzu is due to start next year with financing from the African Development Bank (AfDB). When these works and the Lilongwe- Kasungu road (para. 2.16) are completed, the main north-south spine road will be complete, except for the Kasungu-Jenda and Jenda-Mzuzu sections, which will be constructed and studied respectively, under the proposed project (paras. 4.03, 4.06). Other major ongoing or planned works in the central and northern regions are improvement of the lakeshore road between Nkata Bay and Nkotakota, and the USAID-financed Lilongwe-Mchinji road. While we have some reservations about the economic merits of a few of the road projects as well as some of the priorities within the program, its general size and composition are appro- priate. 3.11 Highway expenditures (Table 4) are financed from the general budget or, for new construction, from the development account which is  - 10 - largely made up of grants and credits from bilateral and multilateral aid programs. Expenditures on construction have averaged about US$9.4 million equivalent annually over the past four years. MWS maintenance expenditures have increased from about US$0.6 million in 1971 to about US$2.4 million in 1977. The funds are sufficient to ensure adequate maintenance of the bitumen and gravel roads, but increased allocations will be required for earth roads, particularly as responsibility for some 1,680 mi of such roads constructed under agricultural projects is being transferred to MWS over the next three years. Government has agreed to exchange views with the Association about its maintenance program for lower class roads. E. Engineering 3.12 The MWS' well-staffed Design Department, consisting of some 62 engineers, technicians and surveyors, and a well-equipped laboratory for materials and soils testing, is primarily engaged in design of structures and water supply facilities; the Department carries out preliminary in- vestigations and road and bridge designs, but engineering for major road projects is done by consultants. The design standards adopted by the MWS (Table 5) are appropriate for the country's topographic and traffic condi- tions. F. Construction 3.13 For major road projects, the Roads Department employs contractors following suitable prequalification and tendering procedures; contracts are generally let on a unit-price basis. In recent years, the Roads Depart- ment has undertaken several force account road construction projects (about US$2.8 million equivalent annually), performance under which has been quite satisfactory. Generally, construction of main roads is not labor-intensive, although the construction of culverts, drains and structural excavation absorbs a substantial labor input. However, labor-intensive methods are being introduced on a trial basis in the improvement and maintenance of district roads (para. 3.16) and if successful will be used more extensively. 3.14 There is a developing domestic contracting industry, which is fully employed on buildings, small structures, and estate roads. While domestic contractors are capable of undertaking improvements under DRIMP, they lack the capacity for major road works which are undertaken by foreign contractors who have shown considerable interest in working in Malawi. Senior domestic contractor personnel are largely drawn from MWS, whose training facilities (para. 3.07) therefore perform a useful function in indirectly training contractor personnel. Construction supervision is carried out by the Roads Department or by consulting engineers acting as its representatives and is satisfactory. Payment procedures are prompt and the experience of the MWS in dealing with contractors has been satisfactory.  - 11 - G. Maintenance 3.15 The Regional Divisions of the MWS are responsible for maintaining the classified road system with the exception of district roads (para. 3.01). These maintenance operations are largely mechanized although extensive use is made of labor for routine maintenance. The Roads Department rents equipment from the Plant and Vehicle Hire Organization, created in 1971, which is responsible for procuring and maintaining all Government owned equipment and vehicles; rental rates are based on the cost of purchasing and maintaining the equipment; equipment availability and utilization are satisfactory. Each of the regions has a well trained cadre of maintenance personnel and maintenance of the all weather network is satisfactory. 3.16 As noted in para. 3.08, district roads have been neglected, but a District Roads Improvement and Maintenance Program was initiated in 1974 under the IDA-financed Second Highway Project.. Under a pilot scheme in Kasungu District, an improvement and maintenance unit was established con- sisting of some light equipment, a depot and housing at a cost of MK 250,000 (US$280,000) (Table 8). The unit assumed responsibility for all maintenance operations of the Kasungu District Council, and the Council's roads employees were seconded to the unit for the duration of the pilot scheme. Most of the work to date has been by "intermediate technology" using the light equipment listed in Table 8. However, the unit has recently commenced experiments with more labor-intensive techniques using hand tools. The pilot scheme has also trained road foremen from all 24 Districts in office and workshop administration, concrete pipe casting, installation of culverts, repairs to timber bridges, setting out road grades and formation of roads, side ditches and mitre drains. Annual running costs are estimated to be about MK 60,000 (US$66,000). 3.17 The pilot scheme is being implemented by MWS, but the improvement and maintenance unit is to be handed over to the District Council when the pilot phase is completed during 1978; the Council foreman will receive further training to enable him to assume his new duties. It is already clear that the scheme has been successful, although some minor modifications in equipment and depot facilities appear worthwhile. Accordingly, the Improvement and Main- tenance Program is ready to be implemented on a wider scale, and the consul tants, Scott Wilson Kirkpatrick and Partners (UK), are preparing a first phase extension to seven additional districts, the maximum number it is feasible to establish over the next three years. Costs of establishing and operating these units 1/ over the next three years are estimated at about MK 3,250,000 (about US$3,600,000), and it is proposed that IDA finance 70% of this out of savings under the Second Highway Project. This represents the same IDA participation as applied to the pilot scheme. 1/ Most of the work carried out by these units in the initial years would be improvement rather than maintenance.  - 12 - 4; THE PROJECT A. Objective 4.01 The objective of the proposed project is to assist the Govern- ment in the general strategy of developing the northern half of the country (paras. 2.02, 3.10), particularly the Mzimba area which is the center of several recently initiated and proposed rural development projects. B. Description 4.02 The project consists of: (a) construction of the Kasungu-Jenda road (about 53 mi) to two-lane bituminous surfaced standard and strengthening three short sections (of about 12 mi total length) of the Zomba-Lilongwe road; and (b) consultant services to: (i) supervise (a); and (ii) undertake feasibility and possibly engineering studies of the Jenda-Mzuzu corridor. (a) Road Construction and Strengthening 4.03 The Kasungu-Jenda road (now about 53.5 mi) is part of the country s south-north spine road which runs through most of the principal centers, from the Mozambique border in the south through Blantyre, Zomba, Lilongwe, Mzimba, Rumphi and Karonga to Chitipa on the Zambian border in the north. The adja- cent section south from Kasungu to Lilongwe is presently being constructed under the Second Highway Project and the section south from Lilongwe to Zomba was constructed under the First Highway Project completed in 1972. The Kasungu-Jenda section crosses flat to rolling terrain and the alignment of the existing earth and gravel road is for the most part satisfactory. However, drainage is poor, resulting in road closures during the rainy season, and the earth and gravel road surface is rough and costly to maintain under present traffic. Under the project, the road will be constructed to two-lane bituminous surfaced standard. The few alignment changes necessary will shorten the road to about 53.0 mi. 4.04 Detailed engineering (para. 1.02) for this construction was pre- pared by Scott Wilson Kirkpatrick and Partners (UK) and is satisfactory. The proposed design standards (Table 6) are consistent with established standards in Malawi, and are appropriate for the forecast traffic. They are based on a  - 13 - design speed of 60 mph and a maximum gradient of 5%. The pavement structure will be natural gravel base course with a double 22 ft wide bituminous sur- face treatment with a 5 foot shoulder on each side. 4.05 Two short sections (of about 8 mi total length) of the Zomba- Lilongwe road (180 mi), financed under the First Highway Project, and an adjoining section of about 4 mi, show signs of serious structural deteriora- tion, notably subgrade failures in black cotton soil areas. In addition, traffic has been about 50% higher and heavier than anticipated at appraisal, so that the former design thickness is inadequate in these areas. Therefore, the project includes the strengthening of the pavement by overlays of asphaltic concrete. Design of the strengthening has been carried out by the MWS's Design Department and is satisfactory. (b) Consultant Services 4.06 (i) Supervision of the Kasungu-Jenda road construction will be carried out by the consultants, Scott Wilson Kirkpatrick and Partners (UK), who undertook the feasibility study and prepared the detailed engineering. The same consultants also reviewed MWS's final design of the strengthen- ing works for Zomba-Lilongwe road and will supervise this construction. (ii) Further, in order to close a gap in preparation work on the main north-south road between Jenda and Mzuzu (about 110 mi), the project provides for consulting services to undertake a feasibility study and, if justified, detailed engineering of this road section. C. Cost Estimates 4.07 Total project cost including contingencies is estimated at US$15.1 million. Total cost, excluding taxes and duties of about 5-1/2%, is US$14.3 million, with a foreign exchange component of US$9.3 million or 65%. Detailed costs are as follows:  - 14 - MK million US$ million Foreign Local Foreign Total Local Foreign Total Component a) Construction: i) Kasungu-Jenda 3.39 4.69 8.08 3.80 5.25 9.05 58 ii) Strengthening of sections of Zomba- Lilongwe 0.43 1.00 1.43 0.48 1.12 1.60 70 b) Consultant Services: i) Supervision of a Ci) 0.08 0.32 0.40 0.09 0.36 0.45 80 ii) Supervision of a (ii) 0.01 0.06 0.07 0.01 0.07 0.08 80 iii) Feasibility and Engineering Studies 0.10 0.40 0.50 0.11 0.45 0.56 80 Subtotal (a+b) 4.01 6.47 10.48 4.49 7.25 11.74 c) Contingencies: i) Physical: 10% 0.40 0.65 1.05 0.45 0.72 1.17 ii) Expected Price Increases 1/ 0.78 1.17 1.95 0.87 1.31 2.18 Subtotal (c) 1.18 1.82 3.00 1.32 2.03 3.35 Total Project Cost 5.19 8.29 13.48 5.81 9.28 15.09 61 Total Project Cost excluding taxes and duties 4.44 8.29 12.73 4.98 9.28 14.26 65 1/ Expected price increases are the following, expressed in %: 1977 1978 1979 1980 For civil works - foreign component 9 9 9 8 - local component 10 10 9 8 Forconsulting services 10 10 10 10 4.08 Apart from the Kasungu-Jenda construction cost,base costs are estimated as of September 1977 and have been derived as follows:  - 15 - (a) Road Construction: The cost estimate for Kasungu-Jenda is based on the tender price (MK 8.08 million), and averages US$170,000 per mile. In a detailed analysis, the consultants estimate the foreign exchange component of construction at 58%. This component includes depreciation of equipment, imported materials, fuel and spare parts, the foreign expense of expatriate personnel, overhead costs and profits. The local component comprises mainly labor, housing, taxes and duties. Costs for strengthening parts of the Zomba- Lilongwe road were estimated by MWS and reviewed by consultants. (b) Consultant Services: Cost of consulting services for supervision is estimated on the basis of 5% of construction costs, which is in line with recent experience in Malawi. The unit cost would be about US$5,000 per man-month. Costs for the feasibility and engineering studies are based on MWS estimates of about 110 man-months at US$5,000 per man-month. D. Financing 4.09 The project will be financed by IDA (US$10.5 million or 74%), the OPEC Special Fund (US$1.8 million or 12%) and Government (US$2.0 million or 14% net of taxes and duties.) Execution and delivery of a Loan Agreement between the Malawi Government and the OPEC Special Fund is a condition of Credit effectiveness. The external funds would finance all foreign costs and about 60% of local costs net of taxes and duties. The detailed financing plan 1/ is as follows (expressed in US$ million); IDA OPEC Special Fund Government Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Road Construction 2.58 6.78 9.36 - - - 1.66 - 1.66 4.24 6.78 11.02 Road Strengthening - - - 0.37 1.34 1.71 0.09 - 0.09 0.46 1.34 1.80 Consultant Services: (i) Supervision of construction and feasibility and engineering studies 0.07 1.07 1.14 - - - 0.20 - 0.20 0.27 1.07 1.34 (ii) Supervision of strengthening - - - 0.09 0.09 0.01 - 0.01 0.01 0.09 0.10 Total 2.65 7.85 10.50 0.37 1.43 1.80 1.96 - 1.96 4.98 9.28 14.26 E. Implementation and Procurement 4.10 MWS will be responsible for execution of the project. The construc- tion and strengthening works will both be executed under separate unit-price 1/ Including contingencies, excluding taxes and duties.  - 16 - contracts awarded after international competitive bidding in accordance with Bank Group guidelines. Tenders for the Kasungu-Jenda road were sought in advance of Board presentation to enable construction to commence at the beginning of the 1978 dry season. The bidding period closed on November 25, 1977, and award of contract is expected to take place in early January 1978. Construction would begin in early April 1978 and is expected to be completed by the end of 1979. Tenders for strengthening the Zomba-Lilongwe road will be sought shortly, and it is expected that the contract will be awarded in April/May 1978 with work completed by the end of 1978. 4.11 Supervision of the construction works, and the carrying out of the feasibility and engineering studies, will be by consultants who will be employed under terms and conditions satisfactory to the Association. Government has agreed to discuss the conclusions of the feasibility study of the Jenda-Mzuzu road with the Association before initiating a detailed engineering study. 4.12 Government has agreed to an implementation schedule (Chart 2) and progress reporting requirements, including indices for measuring implementa- tion progress (Annex II). F. Disbursements 4.13 IDA Credit funds will be disbursed on the following basis: (a) 80% of expenditures on construction of the Kasungu- Jenda road; and (b) 85% of expenditures on consulting services. It is recommended to finance retroactively about US$50,000 to meet consultants fees for preparing tender documents and evaluating bids for the construction of the Kasungu-Jenda road. An estimated schedule of disbursements is given in Table 7. Any funds remaining in the Credit account will be used for project- related purposes. 5. ECONOMIC ANALYSIS Main Benefits and Beneficiaries 5.01 The Kasungu-Jenda road, which accounts for about 77% of project costs, will reduce vehicle operating and road maintenance costs, and significantly reduce travel times, especially by eliminating the loss of time presently incurred when the road becomes impassable on occasions during  - 17 - the rainy season. These benefits will accrue in the first instance to road users, but in view of the competitive nature of the road transport industry (para. 3.04), and the fact that Government prescribed rates, where observed, take account of road conditions, savings in truck operating costs can be expected to be passed on in lower freight rates. It is expected that most traffic in the early years will have its origin or destination in the area adjoining the road or in the rural project areas around Mzimba (see Map), so that benefits will accrue to the population of those areas (estimated at about 80,000) or to people who trade with them. However, when the final link in the north-south road (the Jenda-Mzuzu section) is completed, possibly in 1985, the secondary area of influence of the Kasungu-Jenda road will ex- pand, and the benefits can be expected to be spread more widely throughout the northern region. 5.02 Strengthening of the deteriorated parts of the Zomba-Lilongwe road will save Roads Department the cost of premature reconstruction. It will also result in some cost savings for vehicle operators. Rate of Return Analysis 5.03 Rates of return have been computed for the Kasungu-Jenda road, and the strengthening of Zomba-Lilongwe, by comparing costs with the more readily quantifiable benefits. Other benefits, which have not been quanti- fied, are travel time savings for other than paid drivers, accident reduction, improved comfort, and increased ease of administration. In both cases, cost is taken as the net of tax cost of the roadworks under consideration, in- cluding supervision and physical contingency costs. 5.04 In 1976, traffic on the Kasungu-Jenda road averaged 86 vehicles per day (vpd) 1/ and, at an expected growth rate of 9% per year 2/ would reach 122 vpd in 1980, when the new road is expected to open. It is assumed that the substantial improvement in travel conditions provided by the new road would generate additional traffic equivalent to 20% of the traffic level which could be expected in 1980 in the absence of the road improvement 3/. Total traffic is assumed to grow at 9% per year until 1989, 1/ This comprised 8 cars, 4 vans, 17 land rovers, 4 buses, 15 small (two-axle) trucks, and 38 large (three-axle or larger) trucks. 2/ This is at the upper end of the range of traffic growth rates experienced throughout the country (para. 3.03), but is considered justified in view of major planned agricultural development around the Mzimba area and the expected impact of completing the adjoining Kasungu-Lilongwe road. 3/ If anything, this is conservative. Traffic in the opening year of the Zomba-Lilongwe road, improved under the First Highway Project, was 50% higher than the appraisal forecast, which was based on extrapolation of past growth of 7% per year plus generated traffic of about 8% in the first year.  - 18 - then 8% per year to 1999, the end of the estimated 20-year life of the road. On the basis of the vehicle operating costs shown in Table 9, and following the conventional method of valuing generated traffic benefits at half the unit rate applied to normal traffic, total vehicle operating cost savings are estimated at MK 800,000 (US$880,000) in 1980, rising to MIK 3,750,000 (US$4,120,000) by 1999 (Table 10). Together with road maintenance savings, these benefits are estimated to yield a rate of return of 14%. The road has a first year rate of return of 9%, after charging interest of 10% per year during the construction period; because it has not been possible to quantify all benefits (para. 5.03) actual first year benefits will be higher than estimated. If unanticipated construction cost increases, the major project risk, would amount to 10% more than the estimated cost or if traffic is 10% less than expected, the rate of return would still be satisfactory at 13%. As a further test, a rate of return was computed for a gravel road instead of the proposed bitumen road; the rate of return for the gravel road is lower, at 11%, even assuming it has the same economic life of 20 years. Finally, a separate rate of return was calculated for the northern 17 mi where traffic in 1976 was somewhat less than the weighted average for the whole road (55 vpd compared with 86). The rate of return for a bitumen road for this section is still satisfactory, at 10%. 5.05 For the strengthening of sections of Zomba-Lilongwe, it is estimated that unless the proposed works are carried out, complete reconstruction would be necessary in 1984 and higher vehicle operating costs (Table 9) would be incurred until that time. Traffic on the affected sections was 413 vpd in 1975 1/ and is estimated to grow at 9% per year, except that the opening of the Lilongwe-Salima railway in early 1978 is pessimistically assumed to lead to a reduction of two-thirds in the heavy truck traffic. The cost and benefit streams are detailed in Table 10. The estimated rate of return is 13%. A small proportion of the benefits would accrue to Zambia and Mozambique. 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 Government has agreed: (a) to exchange views with the Association about its maintenance program for lower class roads (para. 3.11); (b) that consultants will be employed on terms and conditions satisfactory to the Association, and that the results of the feasibility study of the Jenda-Mzuzu road will be discussed with the Association prior to proceeding with detailed engineering (para. 4.11); and 1/ Composition was 130 cars, 64 vans, 36 land rovers, 28 buses, 119 two- axle lorries, 18 three-axle lorries and 18 four-axle lorries.  - 19 - (c) on a project implementation timetable and progress reporting procedures (para. 4.12). 6.02 Execution and delivery of a Loan Agreement between Government and the OPEC Special Fund is a condition of Credit effectiveness. 6.03 The Project is suitable for an IDA Credit of US$10.5 million to the Government of Malawi on standard terms. December 7, 1977   TABLE 1 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Highway Network Classification (Miles) By Surface Type 1972 - 1976 1972 1973 1974 1975 1976 Bitumen 607 774 790 900 977 Gravel 464 315 481 383 369 Earth 5,539 5,667 5,498 5,525 5,477 TOTAL 6,610 6,756 6,769 6,808 6,823 By Administrative Classification - 1976 Main Secondary District Other All Roads Roads Roads Roads!1 Roads Bitumen 772 115 5 85 977 Gravel 206 105 1 57 369 Earth 899 1,300 3,129 149 5,477 TOTAL 1,877 1,520 3,135 291 6,823 1/ Classified as either branch, estate, township, private or undesignated roads. Source: Ministry of Works and Supplies, February 1977. December 1977  MUALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT 1/ Vehicle Fleet. 1967-76 Growth Rate 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1967-1976 Passenger Cars 8,418 8,893 9,857 9,771 10,205 10,408 10,218 11,233 10,983 10,222 2.2 % 2/ Goods Vehicles 5,934 6,240 6,696 7,747 7,635 8,121 9,036 9,466 9,500 10,842 6.9 % Buses 127 149 161 176 183 245 275 290 277 299 10.0 % Motorcycles 1,344 1,458 1,507 1,658 2,735 2,569 2,614 2,842 2,903 3,557 11.4 % 3/ Other 3 1,864 1,731 2,009 2,115 2,769 2,560 2,614 3,249 3,556 4,664 10.7 % TOTAL 17,687 18,471 20,230 21,467 23,527 23,903 24,744 27,080 27,219 29,584 5.9 % 1/ Including both Government and privately-owned vehicles, which are licensed annually. 2/ Including trucks, landrovers and minibuses. 3/ Including tractors, trailers, and road construction equipment. Source: Malawi Statistical Yearbook 1975 and the Road Traffic Commissioner, March 1977 December 1977  Table 3 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Current and Planned Road Projects Approximate Estimate5/ Construction Road Length Cost- Period Status (miles) MK ' 000 1. Lilongwe-Kasungu 70 6,190 1975/77 Under construction with IDA financing under Cr. 523-MAI. 2. Lilongwe-Mchinji 74 8,000 1975/78 Under construction with USAID financing. 3. Chikwawa-Bangula 52 9,000 1975/77 Completed early 1977 with USAID financing. 4. Salima-Senga Bay 12 1,000 1975/77 Under construction with UK financing. 5. Mangochi Bridge 330 1975/76 Completed 1976 with UK financing. 6. Nkhata Bay-Mzuzu 30 n.a. 1974/76 Completed 1977 with UK financing. 7. Chiweta-Karonga 66 2,300 n.a. Under construction (improvement) with German and EDF financial assistance. 8. Key Rural Roads (main, secondary and district) n.a. 300/year 1974/79 Under construction with UK financing. 9. District Roads Maintenance Pilot Project (Kasungu District) 262 n.a. 1976/79 Maintenance (improvemmets) started July 1976. Financed under Cr. 523-MAI. 10. Kacheche-Chiweta 44 6,200 1976/79 Under construction with German financial assistance. Feasibility and engineering studies 1976/77 contract awarded early 1977. 11. Mzuzu-Kacheche 33 9,410 1977/79 Due to start 1978 under AfDB financing Feasibility and engineering studies 1976/77. 12. Blantyre-Chikwawa 26 6,000 1977/79 Due to start 1977 with EDF financing. 13. Mangochi-Namwera 14 n.a. Under reconstruction with AfDB financial assistance as a part of an agricultural project. 14. Nkhotakota-Dwambazi 64 2,500 1975/82 Under construction with UK aid. 15. Kasungu-Jenda 53 7,660 1978/80 Proposed for IDA financing under Third Highway Project being appraised. 16. Salima-Benga 33 9,100 1978/80 Due to start 1978. ADF approached for financing. Feasibility and engineering studies 1976/77. 17. Chileka-Mwanza-Mozambique border 50 9,000 1977/79 Feasibility and preliminary engineering studies scheduled to start in 1978 with EDF financing. 18. Chikwawa-Mozambique border 45 n.a. Design completed. No comsitment. 19. Viphya primary roads 55 10,000 Primary roads component of the Viphya jpulp mill project. Design financed by IDA Credit S-17 MAI. No commitment for construction. 20. Karonga-Chitipa-Tunduma 82 n.a. UNDP commitment to finance feasibility studies. Delayed due to shortage of funds. 21. Dwambazi-Nkhata Bay 63 4,600 1978/84 Design completed. No commitment for financing. 1/ Exchange rates approximately Malawi Kwacha 1.00 -US$ 1.10 Source: Ministry of Works and Supplies, February 1977. December 1977  TABLE 4 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Annual Highway Expenditures, 1970-77 (in MK'000) 1/ US$ million Fiscal Year Administrationt- Construction Maintenance Total Equivalent 1970 240 3,684 564 4,488 5.0 1971 280 7,537 587 8,404 9.4 1972 330 4,855 1,364 6,549 7.3 1973 360 3,876 1,334 5,570 6.2 1974 370 3,959 1,378 5,707 6.4 1975 440 5,995 1,562 7,997 9.0 1976 440 10,988 1,882 13,310 14.9 197T 520 12,573 2,100 15,193 17.0 1/ Estimated on the basis of total MWS administrative expenses. 2/ Budgeted. Source: Ministry of Works and Supplies, Roads Department, February 1977. December 1977  TABLE 5 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Road Design Standards Adopted by the MWS 1. Speed (mph)by Type of Road Terrain Normal Mountainous Desirable Minimum e`s3ir-a7e--TTi-iimm Class I 60 50 50 40 Class II 60 50 40 30 Class III Each project treated individually 2. Sight Distance, Minimum Radius, Maximum Gradient Speed (mph) 30 40 50 60 Stopping visibility (ft) 200 275 350 475 Passing visibility (ft) 800 1,300 1,700 2,000 Minimum radius (ft) 239 477 776 1,146 Maximum gradient normal 6% 5.0% 4.5% 4.0% Maximum gradient mountainous 9% 7.0% 6.5% 6.0% 3. Cross Section by Type of Road Roadway Width (ft) Carriageway plus shoulders Class I 22 + 2x5 = 32 Class II 18 + 2x7 = 32 Class III 16 + 2x4 = 24 4. Pavement Structure Design The structure of the roads is designed according to the CBR 9,000 lb wheel load curve. 5. Construction Materials Layer Description Specifications Subgrade: Top 6 in depth (cut) PI ( 30, 95% mod. Top 12 in depth (fill) AASHO - Compaction Subbase: Natural gravel or 10 ( PI < 15 crushed stone CBR 25% at 95% mod. AASHO compaction after 48 hrs. soaking Base: Natural gravel PI< 6; LL <30 CBR 85% at 98% mod. AASHO compaction after 48 hours soaking Crushed stone Aggregate crushing value <30 Stabilized gravel PI (15; LL<40 Unconfined compressive strength 250 lbs/sq in Surfacing material depends on traffic volume and general conditions. 6. Bridges Bridge width = Carriageway width Footpath = 2 x 2 feet Loading: according to BS 153 with 0.8 HA Source: Ministry of Works and Supplies, Roads Department, February 1977 December 1977  TABLE 6 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Design Standards for the Kasungu-Jenda Road Width of right-of-way 200 ft Design speed 60 mph Stopping sight distance 475 ft Passing sight distance 2,000 ft Minimum radius horizontal 1,150 ft Maximum degree of curve 50 Maximum gradient 6% Bituminous surfaced width 22 ft Roadway width 32 ft Crossfall pavement 1:30 Crossfall shoulders 1:20 Cuttings 1:1; 2:1 if h >4' Embankments 1:3; 1:5 if h 74' Pavement type Subbase: 4-6 in natural grave Base: 6 in natural gravel Surface: Double bituminous surface treatment Pavement design wheel load 9,000 lbs equivalent RRL Report LR 279 Structures: Width Equal to roadway width Loading BS153, 0.8 x H A 15U x H B Source: Scott Wilson Kirkpatrick and Partners, Detailed Engineering Study December 1977  TABLE 7 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Estimated Schedule of Disbursements IBRD Fiscal Year Cumulative Disbursements and Quarter at end of Quarter (US$ thousand) 1978 September 30, 1977 December 31, 1977 March 31, 1978 June 30, 1978 1,800 1979 September 30, 1978 2,ZOO December 31, 1978 2,800 March 31, 1979 4,000 June 30, 1979 5,400 1980 September 30, 1979 6,800 December 31, 1979 8,200 March 31, 1980 9,200 June 30, 1980 10,100 1981 September 30, 1980 10,100 December 31, 1980 10,100 March 31, 1981 10,500 June 30, 1981 10,500 Closing Date: June 30, 1981 Source: Mission estimates December 1977  TABLE 8 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Cost of Equipment and Facilities for District Roads Pilot Scheme (in Kasungu District) Equipment No. Type Costs in MK 1 Towed Grader 6,400 2 Medium Farm Tractors 25,500 2 3 ]12T Hydr. Tip Trailers 5,400 2 Pickup Trucks 22,600 1 7/5 cu.ft. Concrete Mixer 3,500 Spares for above items 10,000 73,400 Depot and Housing 6 Houses for Key Staff ) 1 Workshop and Store ) 1 Office Block ) 160,000 160,000 1 Fuel Store ) 1 Watchman's Cabin ) 1 Pipe Casting Yard ) Surface Dressing between Workshop and Office Block 5,000 Workshop Equipment 5,900 Office Equipment 3,000 Hand Tools 2,700 16,600 Total 250,000 Total in US$ 280,000 Composition of equipment and facilities may be different for other districts and will be determined by consultant's study. 1/ In September 1977 prices Source: MWS and mission estimates. December 1977  TABLE 9 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Vehicle Operating Costs!' (Tambala per mile; 100 tambala = 1 Malawi Kwacha) Kasungu - Jenda Road Zomba - Lilongwe Road Poor Good Vehicle Type Earth/Gravel Bitumen Difference Bitumen Bitumen Difference Car 12.1 8.3 3.8 9.3 8.3 1.0 Van 16.8 12.8 4.0 13.8 12.8 1.0 Land Rover 23.1 16.4 6.7 17.9 16.4 1.5 Bus 47.6 30.4 17.2 34.3 30.4 3.9 Truck (7-ton) 57.9 32.8 25.1 38.6 32.8 5.8 Large Truck 127.7 73.5 54.2 86.0 73.5 12.5 1/ Net of taxes and duties, in September 1977 prices. Sources: Derived from Scott, Wilson, Kirkpatrick and Partners, Study of the Lilongwe-Mchinji-Border Road and Lilongwe-Mzimba Road, March 1975 and Feasibility Study of Mzuzu-Muhuju Road, February 1976; and Ministry of Works and Supplies, Nkotakota to Nkata Bay Economic Evaluation, February 1976. December 1977  MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Road Construction Costs and Benefits (Mk '000 in September 1977 prices) Kasungu-Jenda (53 miles) Zomba-Lilongwe (part3;, 12 miles) Benefits Benefits Construction Vehicle Operating Road Maintenance Construction Vehicle Operatin' Avoidance of Future Year Costs Cost Savings Savings Costs Cost Savings7/ Reconstruction 1978 4,370 1,545 1979 4,370 74 1980 799 25 81 1981 871 25 88 1982 949 25 96 1983 1,035 25 1.04 1984 1,128 25 114 2,707 1985 1,229 25 1986 1,340 25 1987 1,461 25 1988 1,592 25 1989 1,735 25 1990 1,874 25 1991 2,024 25 1992 2,186 25 1993 2,361 25 1994 2.550 25 1995 2,754 25 1996 2,974 25 1997 3,212 25 2/ 1998 3,469 25 -947- 1999 3,746 25 Economic Return 14% Economic Return: 13% 1! Represents the difference between vehicle operating costs on existing road and road with asphaltic concrete overlay. It is estimated that, without an overlay now, the existing road would require reconstruction in 1984 after which there would be negligible difference in vehicle operating costs between the project and "base case". 2/ Represents residual value of road reconstruction in 1984. Source: Mission calculations. December 1977 o  ANNEX I Page . of 2 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Transport Related IDA Projects in Malawi A. HIGHWAY PROJECTS Approximate Status Year Credit Amount Main Purpose Length (% complete) (US$ Million) (mi) 1966 S-2-MAI 0.49 Detailed engineering - 100 for main roads. 1968 112-MAI 11.5 Main roads construction; 180 100 study of road transport regulations and road- rail coordination. Re- funding of Credit S-2-MAI. 1974 523-MAI 10.5 Main roads construction; 70 45 pilot program for dis- trict roads maintenance/ improvements. 1974 S-17-MAI 2.0 Design of infrastructure - 95 requirements for ex- ploitation of the Viphya forest resources. B. AGRICULTURAL PROJECTS 1968 113-MAI 6.0 The Lilongwe Land Develop- 1200 100 1971 244-MAI 7.3 ment Program included a 1975 550-MAI 8.5 component for construction of feeder roads. 1968 114-MAI 3.7 The Shire Valley Develop- 190 70 363-MAI 10.5 ment Project included a minor component for con- struction and rehabili- tation of main, secondary and feeder roads.  ANNEX I Page 2 of 2 Approximate Status Year Credit Amount Main Purpose Length (% complette (US$ Million) (mi) 1971 282-MAI 6.6 Karonga Development 32 100 1976 1286-T-MAI 1/ 9.2 Project included a minor component for rehabilitation of freight services on Lake Malawi, including port facilities. 1/ Third Window Loan. Source: IDA appraisal reports and department files. December 1977  ANNEX II Page 1 of 3 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Project Progress Reporting Requirements 1. Progress Reports should be submitted quarterly in triplicate, no later than one calendar month after the end of the quarter. The first Report should cover the quarter ending March 31, 1978. 2. The information that the Report should contain is described below. (a) General information: this section should refer to Project Moni- toring Indices (attached) in reporting the following: (i) the physical progress accomplished during the report- ing period; (ii) actual or expected deviations from the project imple- mentation schedule; (iii) actual or expected difficulties or delays and their effects on the implementation schedule, and the steps planned or taken to overcome the difficulties and avoid further delay; (iv) expected changes in the completion date of the project; (v) key personnel changes in the staffs of the Roads Depart- ment, consultants or contractors; (vi) matters which may affect the cost of the project; and (vii) any development activity likely to affect the economic viability of project components. (b) A bar-type progress chart, based on the project implementation schedule, should show the progress in each project component. (c) A financial statement should be set out in tabular form and indi- cate for each project component: (i) original estimated cost; (ii) revised cost, if appropriate;  ANNEX II Page 2 of 3 (iii) actual expenditure; (iv) projected expenditure; and (v) actual and projected withdrawals from the Credit Account. (d) Finally, the Report should state the status of action on each covenant of the Credit Agreement. December 1977  ANNEX II Page 3 of 3 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Project Monitoring Indices Indices: actual vs estimates: absolute and %. Where activity level, as measured by a specific index, is below estimates, the reason should be ascertained. If a lower than anticipated activity level is the result of an outstanding problem re- commend corrective action. Indices Actual as % Reason for Recommend Corrective Estimated Actual of Estimated Divergence Action, if any I. Construction Work 1. Preliminaries to mobill.ytion (months) 2. Volume of earthwork (yd 3. Length of subbase (mi) 4. Length of base (mi) 5. Length of shoulders (mi) 6. Length of surfacing (mi) 7. Pipe culverts (nos.) 8. Box culverts (nos.) 9. Length of bridges (ft) 10. Construction work completed (date) 11. Contractor certificates for payment (US$ or MK) 12. Payments to contractor (US$ or MK) II. Feasibility and Engineering Studies (a) Feasibility Study 1. Preliminaries to start (months) 2. Inception report (date) 3. Draft Final Report (date) 4. Final Report (date) 5. Payments to consultants (US$ or MK) (b) Agreement on Justification of Engineering Studies by Bank and Government (date) (c) Engineering Studies 1. Preliminaries to start (date) 2. Inception Report (date) 3. Draft Final Report (date) 4. Final Report (date) 5. Payments to consultants (US$ or MK) III. Strengthening of Zomba-Lilongwe Road 1. Preliminaries to mobilization (months) 2. Aggregate produced (yd3) 3. Length of 1. overlay (mil 4. Length of 2. overlay (mi) 5. Length of shoulders reshaped (mi) 6. Construction work completed (date) 7. Contractor!s certificates for payments (US$ or ME) 8. Payments to Contractor (US$ or MK) December 1977   MALAWVI APPRAISAL OF A THIRD HIGHWAY PROJECT ORGANIZATION OF THE MINISTRY OF WORKS AND SUPPLIES MINISTER PERMANENT SECR ETARYV r ENGINEER IN CHIEF REGIONAL ADMINIST NCHIEF CONTROLRAR E IDEPUTY SECRETARY OF D OFB INS IIOFND X E I ~~UNE ICHIEF CONTROLL-ER| I|CHIEF CONTROLLERI 3 [ |SCRE RY|| OF P V.H.O.- OF 51TORES I REGIONAL REGIONAL REGIlONAL ADM]NISTRATION ADMINISTRATION ADMINISTRATION IMZUZUO (LILONGWE) TBLANTYRE PLADNING A REGIONAL REGIONAL | REGONAL| REGIONAL REGIONAL REGIONAL .STORES-STOREJ L.H S I STORES P V H O I | I I , foI By -A I * P.V H O denotes Plant and VeEinIe Hire ODgan-aton. Sounce M-nistr, of Works and Siipitt-, Febriary 1977 W-ec Ams 17357 December, 1977   CHART 2 MALAWI APPRAISAL OF A THIRD HIGHWAY PROJECT Project Implementation Schedule M.in Activities Responsible 1977 1978 1979 1980 1981 Authority 1 2 3 4 1 2 3 4 1 4 1 2 T3 Board Presentation Signing of Credit Agreement Effective Date of Credit a I. ROAD CONSTRUCTION Prepao-ationi of bid documents Consultants IDA review aild approval IDA Prequalification of Contractors MWS Bidding Bid evaluation MWS and Consultants IDA review and approval IDA kward of contract MWS .vMobilization Contractor _ Construction Contractor T _____-- II. CONSULTANT'S SERVICES Selection of con1sultants MWS for supervision Supervision Consultants * _ T _ _ _ _ I III. FEASIBILITY AND ENGINEERING STUDIES Selection of consultants MWS IDA approval IDA Feasibility Study Field and Office Work Consultants . Review of Draft Final Re- MWS and port and approval to IDA proceed with Engineering . Final Report Consultants Detailed Engineering Field and Office Work Consultants Review of Draft Documents MWS and IDA . Final Documenits Consultants IV. STRENGTHENING OF EXISTING ROAD Final Design and Cost MWS and Con- Estimates sultants mm Review and approval MWS and IDA Prequalification of Contractor MWS Preparation of bid MWS and Con- documents sultants Bidding Bid evaluation MWS and Con- - sultants Review and approval IDA * Award of contract MWS Construction Contractor Supervision Consultant World Bank- 18020 December, 1977   IBRD 12857 _ 34f X '_,")ZAIRE A A A .NOLA I'. -A _1:p So,gwe \ ZAMt| A -I,, NMA T / 'SAtA ~~ IZIIWM8A~~~1 / iv./0ttT C Z4LAND ,oh.li,e 'I AFRCA ) A /0chelModa LIVINGSTONIA 0 h a3 *zz \ Jt ~~RuowedZ -.\ / II z r A , ~~Rtuu . 64 Mo318 oi Nb Nd ATAr_ / ~~~~~~~~~~~~~~~~~~~~12 -2,g St 2(0f st tKMA/ MA LA WI' ' ') THIRD HIGHWAY PROJECT f TRANSPORTATION NETWORK _ *,otgvktge -1if K.s.Jng. o 50< I \ Kos/g~, .- Vila CabrIal A a Mponelc tipota, ML */ G 12 74 f < 7 t v zDowo } \ X < Se~~~~~